Abstract

Ryde, Isle of Wight, March 12, 1895

Your letter gives me some light, I think, on how you have come to be side-tracked with the rate of profit. There I find the same way of going off into details, for which I put the blame on the eclectic method of philosophising which has made such inroads in the German universities since '48, and which loses all general perspective and only too often ends in rather aimless and fruitless argumentation about particular points.

Now of the classical philosophers it was precisely Kant with whom you had formerly chiefly occupied yourself, and Kant, owing to the position of German philosophising in his time and to his opposition to Wolf's pedantic form of Leibnitzism, was more or less obliged to make some apparent concessions in form to this Wolfian argumentation. This is how I explain your tendency, which also shows itself in the excursus on the law of value in your letter, to absorb yourself to such a degree in details, without always, as it seems to me, paying attention to the connection as a whole, that you degrade the law of value to a fiction, a necessary fiction, rather as Kant makes the existence of God a postulate of the practical reason.

The reproaches you make against the law of value apply to all concepts, regarded from the standpoint of reality. The identity of thought and being, to express myself in Hegelian fashion, everywhere coincides with your example of the circle and the polygon. Or the two of them, the concept of a thing and its reality, run side by side like two asymptotes, always approaching each other yet never meeting. This difference between the two is the very difference which prevents the concept from being directly and immediately reality and reality from being immediately its own concept. But although a concept has the essential nature of a concept and cannot therefore prima facie directly coincide with reality, from which it must first be abstracted, it is still something more than a fiction, unless you are going to declare all the results of thought fictions because reality has to go a long way round before it corresponds to them, and even then only corresponds to them with asymptotic approximation.

Is it any different with the general rate of profit ? At each moment it only exists approximately. If it were for once realised in two undertakings down to the last dot on the i, if both resulted in exactly the same rate of profit in a given year, that would be pure accident; in reality the rates of profit vary from business to business and from year to year according to different circumstances, and the general rate only exists as an average of many businesses and a series of years. But if we were to demand that the rate of profit – say 14·876934... – should be exactly similar in every business and every year down to the 100th decimal place, on pain of degradation to fiction, we should be grossly misunderstanding the nature of the rate of profit and of economic laws in general – none of them has any reality except as approximation, tendency, average, and not as immediate reality. This is due partly to the fact that their action clashes with the simultaneous action of other laws, but partly to their own nature as concepts.

Or take the law of wages, the realisation of the value of labour power, which is only realised as an average, and even that not always, and which varies in every locality, even in every branch, according to the customary standard of life. Or ground rent, representing a superprofit above the general rate, derived from monopoly over a force of nature. There too there is by no means a direct coincidence between real superprofit and real rent, but only an average approximation.

It is exactly the same with the law of value and the distribution of the surplus value by means of the rate of profit.

(1) Both only attain their most complete approximate realisation on the presupposition that capitalist production has been everywhere completely established, society reduced to the modern classes of landowners, capitalists (industrialists and merchants) and workers – all intermediate stages, however, having been got rid of. This does not exist even in England and never will exist – we shall not let it get so far as that.

(2) Profit, including rent, consists of various component parts: –

(a) Profit from cheating – which is cancelled out in the algebraic sum.

(b) Profit from increased value of stocks (e.g., the remainder of the last harvest when the next one has failed). Theoretically this ought also to equalise itself out (in so far as it has not been already cancelled by the fall in the value of other commodities) either because the capitalist buyers have to contribute what the capitalist sellers gain, or, in the case of the workers' means of subsistence, because wages must also eventually increase. The most essential of these increases in value, however, are not permanent, and therefore the equalisation only takes place in an average of years, and extremely incompletely, notoriously at the expense of the workers; they produce more surplus value because their labour power is not fully paid.

(c) The total sum of surplus value, from which again, however, that portion is deducted which is presented as a gift to the buyer, especially in crises, when overproduction is reduced to its real value of socially necessary labour.

From this indeed it follows from the very first that the total profit and the total surplus value can only approximately coincide. But when you further take into consideration the fact that neither the total surplus value nor the total capital are constant magnitudes, but variable ones which alter from day to day, then any coincidence between rate of profit and the sum of surplus value other than that of an approximating series, and any coincidence between total price and total value other than one which is constantly striving towards unity and perpetually moving away from it again, appears a sheer impossibility. In other words, the unity of concept and appearance manifests itself as essentially an infinite process, and that is what it is, in this case as in all others.

Did feudalism ever correspond to its concept? Founded in the kingdom of the West Franks, further developed in Normandy by the Norwegian conquerors, its formation continued by the French Norsemen in England and Southern Italy, it came nearest to its concept – in Jerusalem, in the kingdom of a day, which in the Assises de Jerusalem left behind it the most classic expression of the feudal order. Was this order therefore a fiction because it only achieved a short-lived existence in full classical form in Palestine, and even that mostly only on paper?

Or are the concepts which prevail in the natural sciences fictions because they by no means always coincide with reality? From the moment we accept the theory of evolution all our concepts of organic life correspond only approximately to reality. Otherwise there would be no change: on the day when concepts and reality completely coincide in the organic world development comes to an end. The concept fish includes a life in water and breathing through gills: how are you going to get from fish to amphibian without breaking through this concept? And it has been broken through and we know a whole series of fish which have developed their air bladders further into lungs and can breathe air. How, without bringing one or both concepts into conflict with reality are you going to get from the egg-laying reptile to the mammal, which gives birth to living young? And in reality we have in the monotremata a whole sub-class of egg-laying mammals – in 1843, I saw the eggs of the duck-bill in Manchester and with arrogant narrow-mindedness mocked at such stupidity – as if a mammal could lay eggs – and now it has been proved! So do not behave to the conceptions of value in the way I had later to beg the duck-bill's pardon for!

In Sombart's otherwise very good article on Volume III I also find this tendency to dilute the theory of value: he had also obviously expected a somewhat different solution?

...

Your article in the Centralblatt [2] is very good indeed and the proof of the specific difference between Marx’s theory of the rate of profit — by quantitative determination — and that of the old political economy was very well demonstrated. The illustrious Loria [3] in his wisdom sees in the third volume a direct renunciation of the theory of value, and here your article comes in handy as a ready reply. Now two people are interested in this: Labriola [4] in Rome and Lafargue, who is polemicising with Loria in the Critica Sociale. If therefore you could send a copy to Professor Antonio Labriola, Corso Vittorio Emmanuele, 251, Rome, the latter would do his utmost to publish an Italian translation of it; and a second copy to Paul Lafargue, Le Perreux, Seine, France, would occasion him to quote you. For that reason I wrote to both of them that your article contained a ready answer to the main point. If you cannot get these copies off please advise me of that fact. But here I must close, otherwise I'll never finish.

Best regards
Yours
F Engels

Notes

Notes provided by the Moscow Editor.

1. Conrad Schmidt (1863-1932) — German economist and philosopher, at the beginning of his career adopted Marx’s economic doctrine but subsequently joined bourgeois opponents of Marxism, author of works that served as a theoretical source of revisionism.

2. ‘Der dritte Band des “Kapital"’ (’the Third Volume of Capital’), which was published in the Sozialpolitisches Centralblatt.